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  1. 1. SWOT and Transformation: Re-Thinking Operations Daniel F. Duran Whittier College BSAD 333: Managing Multinationals
  2. 2. Introduction <ul><li>All companies face competition </li></ul><ul><ul><li>For resources, customers, sales revenues, and profits All companies face uncertain industry environments </li></ul></ul><ul><ul><li>Managers must position the organizations strategically in order to compete successfully </li></ul></ul><ul><ul><ul><li>This is what we call business definition </li></ul></ul></ul><ul><ul><ul><li>Requires that managers understand the dynamics of their firms’ markets before formulating strategies </li></ul></ul></ul>
  3. 3. Introduction (cont.) <ul><li>Rapidly growing markets (emerging industries) tend to be less competitive & often attract new entrants </li></ul><ul><ul><li>Usually provide sufficient room in competitive space for making some mistakes </li></ul></ul><ul><li>Mature, concentrated markets provide firms with very little breathing room </li></ul><ul><ul><li>Mistakes by one firm can significantly impact entire industry </li></ul></ul><ul><ul><ul><li>One firm’s price reductions can set off industry-wide price war </li></ul></ul></ul>
  4. 4. SWOT Analysis <ul><li>Acronym derived from S trengths, W eaknesses, O pportunities, and T hreats </li></ul><ul><ul><li>Used for analyzing industry environments and firms’ internal strengths and weaknesses </li></ul></ul><ul><li>Performed in a 2-step process: </li></ul><ul><ul><li>Managers thoroughly evaluate their firm’s internal strengths and weaknesses and its environmental (external) opportunities and threats </li></ul></ul><ul><ul><li>Managers use the evaluation developed in the first step to place the firm in one of the quadrants of the SWOT matrix </li></ul></ul>
  5. 5. <ul><li>Stimulates communication outside normal channels </li></ul><ul><li>Result is varied information from diverse sources </li></ul><ul><li>Provides an ‘outsiders’ perspective in the SWOT </li></ul><ul><ul><li>Sales -Inventory control </li></ul></ul><ul><ul><li>Production -Quality control </li></ul></ul><ul><ul><li>Advertising -Research & development </li></ul></ul><ul><ul><li>Finance </li></ul></ul><ul><ul><li>Customer service </li></ul></ul>
  6. 6. Benefits of the SWOT Analysis… <ul><li>Simple process which lowers costs </li></ul><ul><li>No extensive training required </li></ul><ul><li>Flexible-enhances strategic planning </li></ul><ul><li>Integration-synthesizes qualitative & quantitative information </li></ul><ul><li>Collaboration-encourages interdepartmental coordination </li></ul>
  7. 7. SWOT Analysis (cont.) <ul><li>Advantages of SWOT Analysis: </li></ul><ul><ul><li>Easy to use </li></ul></ul><ul><ul><li>Can be helpful framework for getting managers to think constructively about their firms’ external environments and internal strengths and weaknesses </li></ul></ul>
  8. 8. SWOT Analysis Objective of SWOT
  9. 9. SWOT Analysis Overcome Weakness Grow Diversify Restructure Numerous Environmental Opportunities Major Environmental Threats Substantial Internal Strengths Critical Internal Weaknesses
  10. 10. SWOT Analysis (cont.) <ul><li>Drawbacks of SWOT Analysis: </li></ul><ul><ul><li>Subjective </li></ul></ul><ul><ul><li>Biased by managers’ perceptions of their firms’ strengths and weaknesses </li></ul></ul><ul><ul><ul><li>For example, managers of strong firms will likely view environmental phenomena as opportunities, while his counterpart in a weak company will likely view them as threats </li></ul></ul></ul><ul><ul><li>The use of SWOT Analysis is likely to yield few clear-cut recommendations </li></ul></ul>
  11. 11. SWOT-Driven Strategic Planning <ul><li>Utilizing a SWOT for strategic planning requires: </li></ul><ul><ul><li>Looking beyond the firm’s current products </li></ul></ul><ul><ul><li>Matching strengths with opportunities (translate strengths into capabilities) </li></ul></ul><ul><ul><li>Investing in key areas: customer support, R&D, promotion, employee training) </li></ul></ul><ul><ul><li>Converting weaknesses into strengths </li></ul></ul><ul><ul><li>Understanding that weaknesses that cannot be converted into strengths become limitations </li></ul></ul>
  12. 12. Directives for a Productive SWOT Analysis… <ul><li>Stay focused </li></ul><ul><li>Search extensively for competitors </li></ul><ul><li>Collaborate with other functional areas </li></ul><ul><li>Examine issues from the customers’ perspectives </li></ul><ul><li>Separate internal issues from external issues </li></ul>
  13. 13. Keys to Staying Focused <ul><li>Focus on specific products & markets </li></ul><ul><li>Adapt the marketing mix to address environmental issues </li></ul><ul><li>Examine overall strategic business units </li></ul><ul><li>Make certain you have 1 SWOT analysis for each product/market combination </li></ul>
  14. 14. Search Extensively for Competitors <ul><li>Do not overlook any competitor (current or future) </li></ul><ul><li>Consider: </li></ul><ul><ul><li>Product competitors </li></ul></ul><ul><ul><li>Generic competitors </li></ul></ul><ul><ul><li>Total budget competitors </li></ul></ul>
  15. 15. Collaborate with Other Functional Areas <ul><li>Stimulates communication outside normal channels </li></ul><ul><li>Result is varied information from diverse sources </li></ul><ul><li>Provides an ‘outsiders’ perspective in the SWOT </li></ul><ul><ul><li>Sales -Inventory control </li></ul></ul><ul><ul><li>Production -Quality control </li></ul></ul><ul><ul><li>Advertising -Research & development </li></ul></ul><ul><ul><li>Finance </li></ul></ul><ul><ul><li>Customer service </li></ul></ul>
  16. 16. Examine Issues from the Customers’ Perspectives in the SWOT <ul><li>What do our customers believe about us as a company? </li></ul><ul><li>What are their perceptions of: </li></ul><ul><ul><li>Product quality </li></ul></ul><ul><ul><li>Customer service </li></ul></ul><ul><ul><li>Price/value </li></ul></ul><ul><ul><li>Convenience </li></ul></ul><ul><ul><li>Promotional </li></ul></ul>
  17. 17. Customer Segment Evaluations Should be Benchmarked <ul><li>Consider internal customers (employees) </li></ul><ul><li>Consider all relevant stakeholders: </li></ul><ul><ul><li>Investors & stockholders </li></ul></ul><ul><ul><li>Suppliers </li></ul></ul><ul><ul><li>Customers </li></ul></ul><ul><ul><li>Governmental </li></ul></ul><ul><ul><li>Societal </li></ul></ul>
  18. 18. Concerns Beyond External Issues <ul><li>Internal issues (strengths & weaknesses) </li></ul><ul><li>Biggest problem with SWOTS </li></ul><ul><ul><li>failure to understand the difference between internal & external issues </li></ul></ul>
  19. 19. The Elements of the SWOT Analysis <ul><li>Strengths & Weaknesses: </li></ul><ul><ul><li>A strength is meaningful only when it addresses customer needs </li></ul></ul><ul><ul><li>A customer-focused SWOT can uncover potential weaknesses </li></ul></ul><ul><ul><li>Weaknesses associated with customer needs should be minimized </li></ul></ul><ul><ul><li>Determine where resources are available & lacking </li></ul></ul><ul><ul><li>Match strengths with market opportunities </li></ul></ul><ul><ul><li>Strengthen weaknesses or minimize their negatives </li></ul></ul>
  20. 20. The Elements of the SWOT Analysis <ul><li>Opportunities & Threats: </li></ul><ul><ul><li>Changes in the external environment can impede the ability to deliver value to customers </li></ul></ul><ul><ul><li>Changes can occur in: </li></ul></ul><ul><ul><ul><li>market growth </li></ul></ul></ul><ul><ul><ul><li>competition </li></ul></ul></ul><ul><ul><ul><li>overall economy </li></ul></ul></ul><ul><ul><ul><li>political/legal environment </li></ul></ul></ul><ul><ul><ul><li>technology </li></ul></ul></ul><ul><ul><ul><li>sociocultural issues </li></ul></ul></ul>
  21. 21. One Way to Conduct a SWOT Analysis-SWOT Matrix <ul><li>4 cells categorizing the SWOT:strengths, weaknesses, opportunities & threats </li></ul><ul><li>Assess magnitude and importance of each </li></ul><ul><ul><li>Based on customer perceptions, not managers </li></ul></ul>
  22. 22. Developing Sustainable Competitive Advantages <ul><li>Capabilities allow the firm to better serve customer needs (competitive advantage) </li></ul><ul><li>Sources of competitive advantage: </li></ul><ul><ul><li>customer loyalty -brand equity -distribution </li></ul></ul><ul><ul><li>patents & trademarks -salesforce -culture </li></ul></ul><ul><li>Capabilities that do not solve customer needs are of little value </li></ul><ul><ul><li>Must have a core competency </li></ul></ul>
  23. 23. How to Achieve a Competitive Advantage <ul><li>Operational excellence-efficiency </li></ul><ul><li>Product leadership-research & development, technology, products </li></ul><ul><li>Customer intimacy-relationship marketing </li></ul>
  24. 24. Strategies Converting Strengths or Threats into Opportunities <ul><li>Find new markets for a firm’s products (conversion strategy) </li></ul><ul><ul><li>May require significant financial resources </li></ul></ul><ul><ul><li>Must identify major liabilities that continue to occur </li></ul></ul>
  25. 25. Minimize or Avoid Weaknesses or Threats Which Cannot Be Converted <ul><li>Become a niche marketer </li></ul><ul><li>Reposition the product </li></ul><ul><li>Realize your limitations </li></ul><ul><ul><li>Diversify to minimize risks of operating in a single market </li></ul></ul>
  26. 26. How could each of the following be a strength or weakness? <ul><li>Highest quality product in the industry </li></ul><ul><li>Significant excess production capacity </li></ul><ul><li>Excellent relationship with a single supplier </li></ul><ul><li>Sizable amount of cash on hand </li></ul><ul><li>Offering a product that is designed to suit everyone’s needs </li></ul>